Interim Results - Part 2

MFI Furniture Group PLC
26 July 2001

PART 2

NOTES TO THE FINANCIAL STATEMENTS

1  BASIS OF PREPARATION
   The financial information for the 24 weeks to 16 June 2001 and 17
   June 2000 are unaudited. The accounting policies are consistent with
   those applied to the audited financial statements for the 52 weeks
   ended 30 December 2000.
   
   These statements do not constitute statutory financial statements
   within the meaning of Section 240 of the Companies Act 1985.The
   Group's full financial statements for the 52 week period ended on 30
   December 2000, on which the auditors made an unqualified report, have
   been delivered to the Registrar of Companies.
   
   
   
2  SEGMENTAL ANALYSIS

                       24 weeks                                         
                          to 16                                 24 weeks
                      June 2001                          to 17 June 2000
                   ____________     ____________________________________

                                         Before                          
                                    Exceptional     Exceptional          
                                          items           items     Total

TURNOVER                      £m                                       £m
UK - Retail                369.0                                    337.0
   - Trade                  88.5                                     58.1
France                      41.7                                     38.6
Other operations             2.0                                      1.8
                    ____________                                   ______
                           501.2                                    435.5
                    ============                                   ======
PROFIT BEFORE                                                            
TAXATION                      £m             £m              £m        £m
UK - Retail                 26.4           22.0             8.7      30.7
   - Trade                   9.6            5.5               -       5.5
France                       3.0            4.5           (0.5)       4.0
Other                                                                    
operations                 (0.2)            0.1               -       0.1
                    ____________   ____________ _______________    ______
Total operating                                                          
profit                      38.8           32.1             8.2      40.3
Profit on                                                                
sale of                                                                  
subsidiary                     -              -            11.2      11.2
Profit on                                                                
disposal of                                                              
Fixed assets                   -            0.7               -       0.7
Net interest                                                             
receivable                   1.8            1.9               -       1.9
                    ____________  _____________ _______________ _________
                                           
Profit before                                                            
taxation                    40.6           34.7            19.4      54.1
                    ============  ============    ============= =========
                                           
                                                                         
NET ASSETS                    £m                                       £m
UK - Retail                190.0                                    197.0
   - Trade                  68.8                                     38.5
France                      21.6                                     14.4
Other                                                                    
operations                   0.3                                      0.9
                   _____________                                _________
                                                                 
                                                                         
                           280.7                                    250.8
Unallocated                                                              
net assets                  87.3                                     94.8
                   _____________                                _________
                                                                 
                           368.0                                    345.6

                    =============                               =========
                                                                

2  SEGMENTAL ANALYSIS (continued)

                                                      
                                              52 weeks
                                   to 30 December 2000
                  ____________________________________

                       Before                           
                  Exceptional      Exceptional          
                        items            items     Total
TURNOVER                                              £m
UK - Retail                                        671.4
   - Trade                                         145.2
France                                              79.7
Other operations                                     4.3
                                                  ______
                                                   900.6
                                                ________
PROFIT BEFORE                                           
TAXATION                   £m               £m        £m
UK - Retail              20.6              8.7      29.3
   - Trade               15.3                -      15.3
France                    5.4            (0.5)       4.9
Other                                                   
operations              (0.4)                -     (0.4)
                   __________     ____________  ________
Total 
operating                                               
profit                   40.9              8.2      49.1
                                                        
Profit on                                               
sale of                                                 
subsidiary                  -             11.2      11.2
                                                        
Profit on                                               
disposal of                                             
fixed assets              0.5                -       0.5
                                                        
Net interest                                            
receivable                4.0                -       4.0
                   __________     ____________  ________
Profit before                                           
taxation                 45.4             19.4      64.8
                   ==========      ===========  ========
                                                
NET ASSETS                                            £m
UK - Retail                                        233.4
   - Trade                                          58.5
France                                              23.5
Other                                                   
operations                                           1.1
                                               _________
                                                
                                                   316.5
Unallocated                                             
net assets                                          30.1
                                               _________
                                                
                                                   346.6

                                                ========
                                               
                                               

Manufacturing operating profit has been apportioned across the separate
divisions in proportion to the external sales of those divisions of in-house
manufactured product.

Unallocated net assets comprise balances in respect of dividends, cash and
borrowings.

The analysis of turnover by destination is not materially different to the
analysis of turnover by origin.



3  EXCEPTIONAL ITEMS

The exceptional items credited in the Group profit and loss accounts for the
24 weeks to 17 June 2000 and 52 weeks to 30 December 2000 are analysed as
follows:

                                                                   £m
                                                                     
Re-occupation of Northampton Distribution Centre                 12.7
Reorganisation of supply chain and structural change costs      (4.0)
Provision for disposal of Spanish operations                    (0.5)
                                                              -------
Total operating exceptionals                                      8.2
Sale of Hygena Packaging Limited                                 11.2
                                                              -------
Total exceptionals                                               19.4
                                                              =======

4  TAXATION

The taxation charge is calculated at 29% per cent of profit (24 weeks to 17
June 2000 - 28%, 52 weeks to 30 December 2000 - 28% both on profits before
exceptional items), being the estimated effective rate of taxation for the
52 weeks ending 29 December 2001.  The Group adopted FRS 19 'Deferred
Taxation' for the 52 weeks ended 30 December 2000, which resulted in a £1m
prior year credit to opening reserves.

5  DIVIDEND

The interim dividend will be paid on 26 October 2001 to shareholders on the
register of members at the close of business on 5 October 2001. The shares
will be quoted ex-dividend on 3 October 2001.


6    RESERVES
  
                                                       
                        Share                                Profit and         
                         premium       Other   Revaluation  loss Account
                        account    reserves       reserve       account
                             £m          £m            £m            £m
As at 30 December 2000     43.9        19.4          42.1         181.7
Retained profit for                                                    
the period                    -           -             -          21.9
Foreign exchange and                                                   
other adjustments             -           -             -         (0.5)
Amortisation of                                                        
goodwill                      -         1.2             -         (1.2)
                       ________     _______      ________      ________
As at 16 June 2001         43.9        20.6          42.1         201.9
                       ========     =======      ========      ========


NOTES TO THE FINANCIAL STATEMENTS

7   EARNINGS PER SHARE
                               24 weeks to                     24 weeks to
                              16 June 2001                    17 June 2000
               ___________________________    ____________________________

              Earnings    Weighted                     Weighted           
                           average                      average           
                            number Earnings              number   Earnings
                                of      per                  of        per
                            shares    share  Earnings    shares      share
                    £m           m        p        £m         m          p
Basic earnings                                                            
per share                                                                 
(eps)                                                                     

Earnings per                                                              
ordinary share    28.8       595.1      4.8      41.7     594.9        7.0
                                                                          
Effect of                                                                 
dilutive                                                                  
share options        -        32.2    (0.2)         -       9.8      (0.1)
               _______    ________ ________  ________  ________  _________
                                                         
Diluted                                                                   
earnings                                                                  
per share         28.8       627.3      4.6      41.7     604.7        6.9
               _______    ________ ________  ________  ________  _________
                                                           
Eps before                                                                
exceptional                                                               
items
                                                                          
Basic earnings                                                            
per share         28.8       595.1      4.8      41.7     594.9        7.0
               _______    ________ ________  ________  ________  _________
                                                          
Exceptional                                                             
items                                                                     
net of tax           -           -        -    (16.8)         -      (2.8)
                                                                          
Basic eps pre                                                             
exceptional                                                               
items             28.8       595.1      4.8      24.9     594.9        4.2
               _______    ________ ________  ________  ________  _________
                                                          
Diluted                                                                   
earnings                                                                  
per share         28.8       627.3      4.6      41.7     604.7        6.9
                                                                          
Exceptional                                                               
items                                                                     
net of tax           -           -        -    (16.8)         -      (2.8)
               _______    ________ ________  ________  ________  _________
                                                           
Diluted eps                                                               
pre
exceptional                                                               
items             28.8       627.3      4.6      24.9     604.7        4.1
               _______    ________ ________  ________  ________  _________
                                                           


7   EARNINGS PER SHARE (continued)

                               52 weeks to
                          30 December 2000
                __________________________

                                  
                                           
               
                     
               Earnings   Weighted 
                           average         
                            number Earnings
                                of      per
                            shares    share
                    £m           m        p
Basic earnings                             
per share                                  
(eps)
                                           
Earnings per                               
ordinary share    49.5       594.9      8.3
                                           
Effect of                                  
dilutive                                   
share options        -         9.8    (0.1)
               _______    ________ ________
                             
                                           
Diluted                                    
earnings                                   
per share         49.5       604.7      8.2
               _______    ________ ________
                             
                                           
Eps before                                 
exceptional                                
items
                                           
Basic earnings                             
per share         49.5       594.9      8.3
                                           
Exceptional                                
items                                      
net of tax      (16.8)           -    (2.8)
               _______    ________ ________
                             
Basic eps pre                              
exceptional                                
items             32.7       594.9      5.5
               _______    ________ ________
                             
                                           
Diluted                                    
earnings                                   
per share         49.5       604.7      8.2
               _______     _______  _______
Exceptional                                
items                                      
net of tax      (16.8)           -    (2.8)
               _______     _______  _______
Diluted eps                                
pre                                        
exceptional                                
items             32.7       604.7      5.4
               _______     _______  _______


8  CASH FLOW STATEMENT

Reconciliation of profit on ordinary activities before interest to operating
cash flows :
                                  24 weeks to    24 weeks to   52 weeks to
                                      16 June        17 June   30 December
                                         2001           2000          2000
                                           £m             £m            £m
Operating profit before                                                   
exceptional items                        38.8           32.1          40.9
Depreciation charge                      16.8           14.5          30.4
Amortisation of fixed asset                                               
investments                               0.7            0.2           1.1
Decrease / (increase) in                                                  
stocks                                    2.1          (14.7)        (35.4)
Increase in debtors                     (4.8)          (30.5)        (28.4)
Increase in creditors and                                                 
provisions                              41.8            69.0          21.3
                                   __________      _________     _________
Net cash inflow - pre-                                                    
exceptional operating                                                     
activities                               95.4           70.6          29.9
Net cash outflow - operating                                              
exceptionals                                -          (4.5)         (4.5)
                                   __________      _________     _________
                                                                          
Net cash inflow from operating                                            
activities                               95.4           66.1          25.4
                                   ==========      =========     =========


NOTES TO THE FINANCIAL STATEMENTS

9  ANALYSIS OF CASH FLOWS FOR HEADINGS NETTED IN THE CASH FLOW STATEMENT

                                  24 weeks to    24 weeks to   52 weeks to
                                      16 June        17 June   30 December
                                         2001           2000          2000
                                                                          
                                           £m             £m            £m
                                                                          
Returns on investments and                                                
servicing of finance                                                      
Interest received                         1.9            1.9           4.8
Interest paid                            (0.1)              -         (0.9)
                                   __________     __________    __________
Inflow on investments and                                                 
servicing of finance                      1.8            1.9           3.9
                                    =========      =========     =========
Capital expenditure and                                                   
financial investment
Payments to acquire fixed                                                 
assets investments                      (8.4)          (2.2)         (2.5)
Payments to acquire tangible                                              
fixed assets                           (21.6)         (13.5)        (35.4)
Receipts from sales of                                                    
tangible fixed assets                     0.3           23.4          35.0
                                  ___________    ___________   ___________
(Outflow)/inflow for capital                                              
expenditure and financial                                                 
investment                             (29.7)            7.7         (2.9)
                                  ===========    ===========   ===========
                                                                          
Cash inflow/(outflow) from                                                
liquid resources                          0.1          (0.1)           0.1
                                   ==========    ===========   ===========
                                                                          
Financing                                                                 
Decrease in bank finance                (0.8)         (16.0)        (18.7)
Capital element of finance                                                
lease rental payments                       -          (0.1)           0.1
                                  ___________     __________   ___________
Outflow for financing                   (0.8)         (16.1)        (18.6)
                                  ===========     ==========   ===========


10  ANALYSIS OF NET CASH

            Cash                                                          
              at
            bank        Current Revolving   Short                    Total
             and          asset    credit    term     Net  Finance     net
              in    investments  facility   Loans    cash   leases    cash
            hand
                                                                          
              £m             £m        £m      £m      £m       £m      £m
                                                                          
As at 1                                                                   
January                                                                   
2000        30.2            0.4     (15.0)   (7.6)     8.0    (0.4)     7.6
Cash flow   71.8            0.1      15.0     1.0     87.9     0.1     88.0
                                                                          
As at                                                                     
17 June                                                                   
2000       102.0            0.5         -    (6.6)    95.9    (0.3)    95.6
                                                                          
Cash                                                                      
flow       (62.4)          (0.2)        -     2.7    (59.9)   (0.2)   (60.1)
                                                                          
As at 30                                                                  
December                                                                  
2000        39.6            0.3         -    (3.9)    36.0    (0.5)    35.5
                                                                          
Exchange                                                                  
movement    (0.2)             -         -       -     (0.2)      -     (0.2)
                                                                          
Cash                                                                      
flow        57.8           (0.1)        -      0.8    58.5       -     58.5
                                                                          
As at 16                                                                  
June                                                                      
2001        97.2            0.2         -     (3.1)   94.3    (0.5)    93.8



Independent review report by KPMG Audit Plc to MFI Furniture Group Plc

Introduction
We have been instructed by the Company to review the financial information
set out on pages 5 to 12 and we have read the other information contained in
the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.

Directors' responsibilities
The interim report, including the financial information contained therein,
is the responsibility of, and has been approved by, the directors.  The
Listing Rules of the Financial Services Authority require that the
accounting policies and presentation applied to the interim figures should
be consistent with those applied in preparing the preceding annual accounts
except where they are to be changed in the next annual accounts in which
case any changes, and the reasons for them, are to be disclosed.

Review work performed
We conducted our review in accordance with guidance contained in Bulletin
1999/4: Review of Interim financial information issued by the Auditing
Practices Board.  A review consists principally of making enquiries of Group
management and applying analytical procedures to the financial information
and underlying financial data and, based thereon, assessing whether the
accounting policies and presentation have been consistently applied unless
otherwise disclosed.  A review is substantially less in scope than an audit
performed in accordance with Auditing Standards and therefore provides a
lower level of assurance than an audit.  Accordingly we do not express an
audit opinion on the financial information.

Review conclusion
On the basis of our review we are not aware of any material modifications
that should be made to the financial information as presented for the 24
weeks ended 16 June 2001.

KPMG Audit Plc
Chartered Accountants
London

26 July 2001